Spain says to announce regional debt mechanism soon

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Spain says to announce regional debt mechanism soon

Reuters | July 09, 2012 | 04:36 PM EDT

MADRID (Reuters) - Spain will give details this week or next of a debt instrument created to help its regions - which face prohibitively high borrowing costs in open markets - to raise cash and repay bonds, a government official said on Monday.

Spain's 17 autonomous regions, largely responsible for the country missing its deficit target by a wide margin in 2011, need to refinance some 36 billion euros ($44 billion) of debt this year, but investor nerves have made it tough for them to raise money.

Turbulence in financial markets has pushed Spain's benchmark 10-year bond yields to euro-era highs and the government has applied for aid of up to 100 billion euros to recapitalize some of the country's banks, hit by a burst property bubble.

Public administration secretary Antonio Beteta said market volatility has delayed the regional fund-raising project.

"If everything goes as expected in the Eurogroup and Ecofin meetings this week, you may see an instrument for the regions this Thursday, in which case it'll be taken to this or next week's cabinet meeting," he said.

Euro zone finance ministers are due to meet later on Monday while a wider gathering of EU finance chiefs on Tuesday is set to ease deficit goals set for Madrid.

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Source: http://www.cnbc.com/id/48125605?__source=RSS*tag*&par=RSS

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